It’s showtime!  Time to go to the trade shows to see all the great new merchandise.  Can you control your urge to buy?

You are about to see…everything.  You are about to be tempted, romanced, encouraged, brow-beaten, threatened and sold (not necessarily in that order).  Anything you imagined will be at the show and it will be hard to pass up any of it – but you must if you want to survive.  You must have a plan to guide you through the mine field that is the show floor.  Without a plan, you will experience catastrophic explosions (actually, implosions) in your cash flow as you proceed through the coming months.  Beloved, anticipated merchandise will arrive creating euphoria.  Invoices will come due creating depression and panic.

Are you scared?  Probably not, and that could be the problem.  If you have a plan – an open-to-buy plan – you are in the driver’s seat.  You know what your needs are based on what you expect (realistically) to sell in each category of merchandise at the turn rates you want to achieve.  You realize how important turnover is to your bottom line and you realize that the bottom line is what it’s all about.  If you are in this decided minority – congratulations.  You’re ready to go.  Your experience should be rewarding if you stay with your plan.

But then there is the other 90% of all retailers who in their best self-destructive voice cry out,  “I know what my customer wants.  I know what sells.  I don’t need to plan.  I can work it out in my head as I go.”  Some of you will guess right and survive another season of nail biting.  Most will be over-run with invoices and sales that, while good, are not good enough to cover all the bills.  Many will just run out of cash and close their stores.  This just doesn’t have to happen!

Nothing of importance is accomplished without planning.  And even with plans, things go amiss.  But that is not a reason to eliminate planning, it is a reason to plan more carefully.  Intense planning goes into everything that is built.  Houses, bridges, skyscrapers, cars, anything.  Planning makes everything go more smoothly.  Many problems are eliminated in the planning stages.

For some reason, most retailers feel that planning is superfluous.  They feel they can just do it because of their “retail radar”.  They know what’s hot and what their customers will buy.  But do you know how much?  This is always the big question because too much of a good thing is a bad thing.  Even a talented buyer (item selector) needs help with quantities.  Not just individual item quantities, but how much should be bought (received) in each category of merchandise so inventories are correct to support anticipated sales at desired turn rates and yield a positive cash flow month after month.  Open-to-buy planning is this help.

An open-to-buy plan almost has a life of its own since it is always planning twelve months into the future.  As one month is completed, another is added to the plan.  Retailers are always prepared to place orders up to twelve months ahead.  No matter what deliveries are proposed, with an open-to-buy plan, you will know your needs and make the correct decisions.

Well before buying is done, the open-to-buy plan is constructed.  Once completed, it is revised on a monthly basis after the sales, inventory and turns from the month just completed are analyzed and trends identified.  Open-to-buy is never static.  It reacts to the forces that shape your business and keeps you on track to financial success.  When you go to a show with your open-to-buy plan, you have the one tool that will insure that you order properly in each category.  You  will find as the months progress that your inventory is fresher, better balanced, turns faster and requires far fewer markdowns..

By the time you read this article, you will be at the next show or back at your store.  Is it to late for open-to-buy?  Of course not.  The best time to set up an open-to-buy plan is NOW.  The sooner the better.  Once you do, you will see where you are over- and under-stocked, where you are over- and under-bought, and have your buying plan for the next twelve months.  As soon as you review this information, you should take action to bring yourself in line.  Reduce over-stocked areas and put that cash in your bank account.  It isn’t benefiting you just sitting on the shelf, so clean it up and dedicate those funds to promotion, training, displays or other areas that will enhance your sales.  Your open-to-buy plan will handle your inventory.

So how will an open-to-buy plan be useful at a show?  If you do your homework and take your open-to-buy plan with you, you will know exactly how much merchandise to buy.  Do some advance planning (your route through the show) so you can see everything that is available and detail information on a “merchandise comparison” form for items you feel are hot before you place any orders.  Then go back and look at the best items on your forms and if they still excite you, place your orders.  Keep track of your buying against your open-to-buy plan and you will be ordering the right quantities of the best merchandise in each category.  An unbeatable combination.

An open-to-buy plan is developed in steps.  The first is to divide your merchandise into compatible groups based on what types of merchandise your customers are shopping for.  Next you need to develop a sales plan in each of your merchandise categories for each month for the next 12 month.  Annual turnover rates are determined for each category and adjusted to reflect the sales impact of each month.  With sales and turn, ideal monthly beginning inventories can be calculated and when compared with actual figures will point out where you are over- or under-stocked.  Finally, the open-to-buy calculations are run which will show how many dollars of merchandise should be received monthly in each category for the next 12 months.  When outstanding orders are compared with the open-to-buy figures, you will see where you are over- or under-bought in each merchandise category.  Immediate action to over-stocked and over-bought situations will make a huge difference in your cash flow as you work through the balance of the year.

So, enjoy the show.  But get your open-to-buy plan underway as soon as possible.  Your survival may depend on it – your success most certainly does!


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